As mentors with SCORE, we get many questions about how long and detailed a business plan should be. To answer this question, it may be helpful to think of business plans in two categories:
1) Traditional business plan: Think of this as a many-pages business plan. This type of plan is very detailed, takes more time to write, and is comprehensive. Lenders and investors commonly request this plan
2) The lean startup business plan: Think of this as a one-page business plan. This type of plan is high-level focus, fast to write, and contains key elements only. Some lenders and investors may ask for more information. This article will focus on this type of plan.
Lean startup format
You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan. Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company. There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan.
We discuss nine components of a model business plan as follows.
Key partnerships: Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.
Key activities: List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.
Key resources: List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to women, veterans, Native Americans, and HUBZone businesses.
Value proposition: Make a clear and compelling statement about the unique value your company brings to the market.
Customer relationships: Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.
Customer segments: Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.
Channels: List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.
Cost structure: Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.
Revenue streams: Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space.
The following are details which could be used to help create a lean startup format plan for a sample business, the Wooden Grain Toy Co.
Identity: Wooden Grain Toys manufactures high-quality hardwood toys for children aged 3-10.
Problem: Parents and grandparents are looking for high-quality, durable toys that will entertain kids and foster creativity.
Our solution: Our handcrafted toys are made from solid hardwoods, and are designed with sufficient moving parts to engage young children without limiting imagination.
Target market: The target audience is adults, specifically parents and grandparents who wish to give toys to their children or grandchildren.
The competition: Wooden toys are part of a niche market with companies of all sizes. Large companies include Plastique Toys and Metal Happy Toys, which sell internationally. Smaller companies sell locally in shops, craft fairs, or online.
Revenue streams: Wooden Grain Toys will sell directly to customers at craft fairs and online.
Marketing activities: Wooden Grain Toys will communicate with customers with an email newsletter, targeted Google and Facebook ads, social media, and in person at craft fairs.
Expenses: Materials for toys including wood, steel, and rubber; craft fair fees and travel costs; inventory space for products.
Team and key roles: Currently, the only team member is the owner, Andrew Robertson. As profits increase, Wooden Grain Toys will look to add an employee to assist with social media and online marketing.
Milestones: As business grows, Wooden Grain Toys will advertise in target markets — especially in advance of the holiday season.
Read more online at https://www.sba.gov/business-guide
Paul Krecke, a volunteer business mentor with SCORE’s Tip of the Mitt chapter, has a business background in clothing retailing and commercial real estate.To request SCORE’s free and confidential mentoring services for small businesses, call (231) 347-4150 in the Petoskey area or (989) 731-0287 in the Gaylord area.